This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Diageo Pours Double Shot of Earnings Growth and Diddy's Tequila

NEW YORK (TheStreet) -- The global beverage giant Diageo (DEO) has teamed with the international rap star Diddy to purchase DeLeon, a luxury brand of tequila produced in the Mexican town of Purisima del Rincon. Diddy (a.k.a. Sean Combs) and Diageo are hoping to replicate the success of their Ciroc vodka venture, which resulted in a 40-fold increase in sales as Diddy fronted for Diageo's label.

For long term investors, Diageo offers a cocktail of earnings, sales, and dividend growth.

Based in London, Diageo is the world's biggest distiller. It sells such well-known brands as Guiness, Ketel One, Johnie Walker and Captain Morgan in more than 180 countries.

Both sales and earnings growth are improving for Diageo. Over the past five years, sales growth was 7.2%. On a quarterly basis, sales growth is now at 16.9%.

Earnings-per-share growth is showing the same bullish pattern. At present, earnings-per-share growth is 34.8% on a quarterly standard. For the year, it is 27.5%. That is a significant improvement from the earnings-per-share growth rate of 11.50% registered for the last five years.

Must Read: Why U.S. Bancorp is a Top 25 Dividend Giant (USB)

Overall, Diageo reports 28% growth for "profit attributable to parent company's equity shareholders" from 2012 to 2013. The best performing brand in terms of sales growth has been Buchanan's Scotch whisky, with a 26% net movement. Next is Crown Royal, with a 17% jump. Bushmills and Tanqueray both posted 12% increases in sales. The spirits category had the highest sales growth at 9%.

Much of that sales growth has come from a focus on the expanding consumer class in emerging market nations. A report from McKinsey predicts that one billion people will join the global consumer class by 2025.

Diageo has toasted the newly affluent in Brazil, China, India and other developing nations with an increase in sales of more than one-third. At present, emerging markets account for 42% of sales. That is up from 30% in 2004. According to Ivan Menezes, its Chief Executive Officer, Diageo expects more than half of its revenues to emanate from countries other than Great Britain and the United States in the years ahead.

The shareholders of Diageo should look forward to rising dividends for the future, too, based on the history of the company.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
DEO $103.18 0.00%
AAPL $109.27 0.00%
FB $88.26 0.00%
GOOG $600.70 0.00%
TSLA $241.93 0.00%

Markets

Chart of I:DJI
DOW 16,102.38 -272.38 -1.66%
S&P 500 1,921.22 -29.91 -1.53%
NASDAQ 4,683.9190 -49.5780 -1.05%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs